The USD/CAD has moved lower and is within sight of support levels created yesterday as speculators try to understand U.S Federal Reserve Rhetoric.
The USD/CAD has moved lower in the wake of the U.S. Federal Reserve’s anticipated interest rate hike. The move by the U.S central bank was anticipated and didn’t surprise many. As of this writing the USD/CAD is trading near the 1.35850 mark which is near support levels touched on Wednesday following the Fed rate hike. Intriguingly the USD/CAD did start to reverse upwards late yesterday when financial institutions grew a bit nervous as Jerome Powell, the Federal Reserve Chairman, held his Fed’s Press Conference.
The U.S. Federal Reserve essentially said it will take a wait-and-see approach with U.S. data in the coming weeks before making a decision regarding June’s interest rate decision. This means another potential hike is in the cards on the 14th of June, but there is not a lot of certainty regarding what will happen. However, there is reason to suspect because of the U.S. Fed’s decision to announce a ‘potential pause’ in June, that this may cause financial houses to see this as more evidence that the U.S. central bank may become more dovish by the end of 2023.
It should also be noted that the ability of the USD/CAD to move lower yesterday, but not break through important short-term support may have something to do with Crude Oil prices falling in value the past couple of days. WTI Crude Oil dropped below 70.00 USD per barrel and has sustained its lower realm in the short term. The USD/CAD may have slightly more durable support based on the notion that commodity prices could struggle if a sustained recession were to take hold in North America and elsewhere. Canada is a large producer of energy resources.
- The U.S. will publish Non-Farm Employment Change and Average Hourly Earnings statistics tomorrow. The results from these reports will stir up the USD/CAD.
- The trading action in the USD/CAD was not overly volatile yesterday, and this means that cautious attitudes are still part of the behavioral sentiment.
Speculators may find technical chart perceptions in the short term will help them gauge behavioral sentiment which will be important. The current value of the USD/CAD is near an important juncture created yesterday. The high created yesterday for the USD/CAD was approximately 1.36400 before the Fed’s interest rate announcement. Traders may want to look for quick-hitting trades today and try to take advantage of perceived momentum, traders should not be overly ambitious. Tomorrow’s job numbers should be watched carefully for any surprises too.
Current Resistance: 1.35900
Current Support: 1.35790
High Target: 1.36125
Low Target: 1.35610
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